1. "An appropriate frame" -- With all decisions, you have to first start with a frame, which is basically stating the problem you want to solve. If you frame your decision in terms of avoiding losses, you might put your cash into the bank. If you did that in 2012, you would have lost the opportunity for a 10 percent return (an investment in an S&P 500 Index Fund returned over 10 percent in 2012).

What if you framed your decision this way? "I want to make the most money possible in the shortest amount of time." With a crystal ball, you could have chosen to bet all your money on a stock that more than doubled in 2012. If you look back at the top performers for 2012, you'll find hundreds of winners. Without a crystal ball, you might have purchased a losing stock -- there were hundreds that lost more than 90 percent in 2012, according to Morningstar's Principia database. Morningstar is a provider of independent research. An appropriate frame for a retiree might be: "I want to earn enough to cover my expenses and grow my capital at the same time to offset inflation and taxes as time goes on."

2. "Creative, doable alternatives" -- Every investment problem can be solved in more than one way. What are the options? For example, if you need income in retirement, you might buy a packaged product, such as a variable annuity with guaranteed minimum withdrawal features. Or you might want to set up and control a portfolio that you devise and manage yourself.

3. "Meaningful, reliable information" -- In today's financial world, there are more sources of information than an individual can reasonably be expected to absorb. One of the challenges an investor faces today is what to ignore. The question to answer is what is meaningful to you as an investor. For example, a retiree will be interested in research from reputable sources such as Morningstar, Value Line or Standard and Poor's, and will shy away from getting information from a free-dinner presentation. Like Morningstar, Value Line and Standard and Poor's publish independent research.

4. "Clear values and trade-offs" -- Investing is all about risk/reward trade-offs. This is the homework that many investors find too much to take on, but that is a mistake. For example, a reader of this column contacted me recently about a complex retirement income product she was considering buying. Together, we worked out a way for her to get competing product information from three other vendors, so that she would compare values and trade-offs. It took a lot of work on her part, but resulted in a good decision, one that she was comfortable with. She made a decision based on information rather than on the original sales pitch.

5. "Logically correct reasoning" -- In investing, as in other fields, there might be a tendency to react positively to a powerful emotional message (a scarce investment that promises huge profits). It's better to rely on reason ("just how will the profits be delivered?") rather than emotion ("I'd love to make a big hit").

6. "Commitment to action" -- At some point in the analytical process, it will be time to move forward with appropriate actions. There will be buy, sell, or hold decisions. It is important to follow them with management decisions. What does that mean? Setting objectives and monitoring the investments to make sure that your objectives are being met. For example, a retiree needs to focus on whether the desired income is produced, unwanted risk avoided, and long-term capital appreciation achieved.

What better time than now, the beginning of a new year, to set up your own decision-making framework?

Julie Jason, JD, LLM, award-winning author of "The AARP Retirement Survival Guide: How to Make Smart Financial Decisions in Good Times and Bad," and "Managing Retirement Wealth: An Expert Guide to Personal Portfolio Management in Good Times and Bad," is principal of Jackson, Grant Investment Advisers, Inc. of Stamford. Please e-mail her with questions at readers@juliejason.com or write to her c/o The Advocate, 9A Riverbend Drive South, Box 4910, Stamford, CT 06907. Copyright 2012 Julie Jason.